May retail sales dip after Easter buying splurge

Retail sales fell 0.5 per cent between April and May, dipping after the Easter boost to families’ shopping, even with strong growth on the year.

Sales by quantity were 3.9 per cent higher last month than in May 2013, and up 1.3 per cent in the three months to May, when compared to the three months to February.

Of the 3.2 per cent boost in sales values, non-food outlets made up more than two percentage points, the largest contributor to growth – while petrol stations weighed against the overall expansion.

“The underlying strength of sales volumes is partly due to falling prices, reflecting the pound’s appreciation as well as the intensity of competitive pressures in certain sectors, such as food,” said Samuel Tombs of Capital Economics.

Retail prices are still falling, down 0.7 per cent year-on-year. Fuel costs were the largest factor driving prices down, falling by 2.2 per cent from May 2013.

Sporting goods and toy stores enjoyed some of the largest year-on-year growth, with sales up by nearly one third. The Office for National Statistics suggested that preparations for the World Cup were a major factor in the boost for the stores. Businesses with fewer than 10 employees were also major beneficiaries over the year, with sales up 16.9 per cent.

“Since real earnings have yet to rise, some consumers are probably already overstretching their finances in order to spend more,” added Tombs. “However, we remain optimistic that a further fall in overall inflation and a recovery in productivity will lift real pay and so provide more solid foundations for the recovery in consumer spending soon.”

The proportion of retail spending done online continued to climb, and now accounts for 11.4 per cent of total retail spending, excluding fuel, up from 10.3 per cent 12 months ago.

The UK’s average weekly spend online increased by 15.1 per cent in the period, and runs to £727.5m.

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